Panasonic Corporation : Panasonic to Close Shanghai Factory

01/10/2013 | 11:26pm US/Eastern

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Panasonic Corp. (6752.TO) said Friday it is shutting a plasma television assembly plant in Shanghai, the latest indication of how the Japanese consumer electronics maker's big bet on the technology hasn't paid off.

The closure of the struggling Japanese electronics giant's sole dedicated plasma TV factory in China is part of its broader restructuring, and comes at a time when demand for plasma TVs is steadily declining. Liquid-crystal-display TVs dominate the market, and most Panasonic TV sets now come with LCD screens.

The Shanghai plasma TV plant has stopped operations, and Panasonic's majority-owned Chinese joint venture that runs the factory will be liquidated, the company said. The employees at the Shanghai plant will be leaving the company.

However, Panasonic, which has invested billions of dollars into producing plasma and LCD panels for TVs, said it plans to continue to assemble some plasma TV sets in China. It will move operations to another Chinese TV factory in the eastern province of Shandong, where it currently produces LCD TV sets.

Having posted net losses in three of the past four fiscal years, the company best known for its Viera TV sets is redoubling its efforts to streamline operations to return to profit. In October, Panasonic forecast a net loss of Y765 billion ($8.61 billion) for this fiscal year ending March 31, citing hefty restructuring costs.

When flat-panel TVs began to replace traditional cathode-ray-tube models about a decade ago, plasma and LCD were both viewed as strong contenders to become the standard display technology. Over the years, LCD displays, which found broader applications ranging from mobile phones to TVs, emerged as the mainstream technology, and most TV makers have stopped using plasma display panels.

In recent years, the industry has been looking beyond LCD displays--major TV makers, including Panasonic, are developing new models using organic light-emitting-diode technology.

Panasonic said it still manufactures plasma display panels at its Japanese factory, and assembles plasma TV sets at several overseas plants.

The decision to close the Shanghai plasma TV factory doesn't mean the company is walking away from plasma technology, a Panasonic spokeswoman said. The company still sees demand for plasma panels, particularly for non-consumer purposes such as large public displays and digital signage, she said.

Even so, the plasma business now plays a much smaller role within Panasonic's TV operations than it did a few years ago. The company has already scaled back its plasma panel production in Japan.

The company's sales of plasma TVs peaked at 7.5 million units in the fiscal year that ended March 2011, accounting for nearly 40% of its total TV sales. For this fiscal year, Panasonic expects to sell only 2.5 million plasma TV sets, which would represent just 16% of the company's overall TV sales.

Meanwhile, Panasonic is ramping up its efforts to capture the nascent market for products using OLED screens. At the annual Consumer Electronics Show in Las Vegas this week, Panasonic unveiled a 56-inch OLED panel that has four times the resolution of conventional full high-definition screens.